Forecast Cost of Goods Sold Statement. Mendez, Inc. with $8,000,000 of par stock outstanding, plans

Forecast Cost of Goods Sold Statement. Mendez, Inc. with $8,000,000 of par stock outstanding, plans to budget net earnings of 6%, before income taxes, on this stock.

The Marketing Department budgets sales at $12,000,000.

The budget director approves the sales budget and expenses as follows: Marketing 15% of sales

Administrative.. .. .. .. .. .. .. .. .. .. .. . .. .. .. .. 5% of sales

Financial. '” 1 % of sales

Labor is expected to be 50% of total manufacturing costs; raw materials for the budgeted production will cost $2,500,000; therefore, any savings on manufacturing costs will have to be in factory overhead.

Inventories are to be as follows:

Beginning of Year End of Year

Finished goods ” . Work in process . Raw materials .

$200,000

50,000

400,000

$500,000

150,000

300,000

Required: The projected cost of goods sold statement, showing therein the budgeted purchases of materials and the adjustments for inventories of raw materials, work in process, and finished goods.